Byย
Another legislative session has come and gone in Sacramento, and once again California has thumbed its nose at veterans and shot itself in the foot.
AB46, introduced last year by Assembly Member James Ramos, D-San Bernardino, proposed exempting military retirement pay and survivor benefits from state taxation for 10 years. The bill enjoyed widespread support and passed the Assembly unanimously in May 2023. In the Senate, it sailed through two committees without a single negative vote before stalling in theย Appropriations Committee. AB46 languished there in the โsuspense fileโ throughout 2023 and 2024, dying a slow death until the legislative session ended two weeks ago. The Senateโs inaction and Gov. Gavin Newsomโs failure to champion the bill may seem prudent given the current budget deficit, but it will cost California over the long haul.
California was once a highly desired location for military retirees. California has more military bases and active dutyย personnelย than any other state and, as recently as 2016, only Texas and Florida had more retired veterans. However, according to actuarial figures from theย Department of Defense, California lost over 24,000 military retirees from 2010 through 2022 (the latest year for which figures are available), a 15% decrease. No other state lost more than 1,800. At the same time, Texas, Florida, Virginia, North Carolina, South Carolina, Georgia and Tennessee all enjoyed double-digit growth in their military retiree populations.
The high cost of living in California is part of the reason for the exodus, but the primary driver is the exorbitant tax burden on military retirees compared to other states.ย Californiaย is the only state that fully taxes military retirement pensions. The Military Officerโs Association of America, which advocates for military and veteran issues, rates states on aย color-coded mapย based on how they tax military retirement pay and survivor benefits. California is the only state in red, sticking out like a sore thumb and chasing away military retirees.
During a time of multibillion-dollar state budget deficits, the governor and state senators are right to scrutinize any legislation that would reduce revenue. What they must consider as they look for short-term savings, however, is that the loss of 24,000 military retirees costs California nearly $700 millionย annuallyย in federal dollars flowing to our state. Moreover, the loss of these retirees drains California of highly trained professionals who often contribute another two decades to the workforce, increasing the tax base for years in their new states.
The high cost of living in California is part of the reason for the exodus, but the primary driver is the exorbitant tax burden on military retirees compared to other states.ย Californiaย is the only state that fully taxes military retirement pensions. The Military Officerโs Association of America, which advocates for military and veteran issues, rates states on aย color-coded mapย based on how they tax military retirement pay and survivor benefits. California is the only state in red, sticking out like a sore thumb and chasing away military retirees.
During a time of multibillion-dollar state budget deficits, the governor and state senators are right to scrutinize any legislation that would reduce revenue. What they must consider as they look for short-term savings, however, is that the loss of 24,000 military retirees costs California nearly $700 millionย annuallyย in federal dollars flowing to our state. Moreover, the loss of these retirees drains California of highly trained professionals who often contribute another two decades to the workforce, increasing the tax base for years in their new states.
